Schedule C
Also known as: Form 1040 Schedule C · sole proprietor tax form
Definition
Schedule C (Form 1040) is the IRS tax form used by sole proprietors and single-member LLCs in the United States to report business income, expenses, and net profit or loss. It's the primary tax form for most US-based freelancers.
Detailed Explanation
Schedule C is where freelancers report all business income (from 1099-NEC forms, client payments, platform payouts) and deduct all business expenses organized by IRS categories. Key sections: Part I — Income (gross receipts, returns and allowances), Part II — Expenses (advertising, vehicle expenses, commissions and fees, contract labor, depreciation, insurance, legal and professional services, office expenses, rent, repairs, supplies, taxes and licenses, travel, meals, utilities, home office, and other expenses). The net profit from Schedule C flows to Form 1040 as taxable income AND is subject to self-employment tax (Schedule SE). AI bookkeeping tools that categorize expenses by IRS deduction category make Schedule C preparation dramatically faster — export a categorized CSV and fill in each line item by category total.
Freelancer Example
A freelance graphic designer earning $62,000 in 2026 prepares their Schedule C. They report $62,000 in gross receipts, $3,000 in advertising expenses, $1,800 in equipment, $4,200 in software subscriptions, $2,400 in home office deduction, and $1,500 in other expenses. Total deductions: $12,900. Net profit: $49,100, which flows to their personal tax return.